Yesterday we witnessed an exchange of blows between two popular Software-As-A-Service providers Mailchimp and Shopify after the latter decided to remove Mailchimp application from Shopify store.
That things happen in business, but now the parties decided to post quite harsh public statements, which is more rare. It however helps o
Mailchimp posted a statement where blames Shopify in 2 main things:
- Dictating application providers who to partner with, basically tampering competition
- Handing over to Shopify too much data, one that was ‘acquired outside of of Shopify’
Shopify response mentioned the as a core reason of removing Mailchimp app unwillingness of Mailchimp to share the data:
The data captured on behalf of our merchants belongs to those merchants, it’s as simple as that. Mailchimp was not willing to agree to these terms.
Naturally both parties claim that their position is based on the best interests of the customers. Let’s see how much truth in that.
Battle over data
Data is called ‘a new oil’ and it is clear that the battle here is over who will be a primarily custodian of the merchant data – Shopify (eCommerce platform) or Mailchimp (marketing automation platform). It looks like Shopify wants to have all the data hence becoming the most valuable vendor for online store owners, harder to replace and with more level of lock-in.
Other IT systems in that approach should be dispensable, hence making easier to be replaced. All the data is there in Shopify anyway .
Also more data passing through the platform opens other possibilities to use it, even if the data is depersonalised. There are so many things that humanity managed to make from oil aside of burning it in engines.
Time to take side and decide who is your friend and your enemy
Next area of dispute – demanding from Mailchimp who partner with is a step in the same direction. The exact terms are not clear, but it looks like Shopify asked about certain exclusivity – if you have an app with us, don’t do the same with our competitors.
If Mailchimp’s only eCommerce platform partner is Shopify that directs all Mailchimp users to Shopify once they decide to engage in eCommerce. Good for Shopify.
Mailchimp here gets much weaker position: not only they lose current and new users who prefer other eCommerce platforms, but also they are becoming much more dependable on Shopify.
So I understand why Mailchimp decided to say no Shopify’s demands. They may lose some clients now, but make the business more sustainable in the long run.
Merchant dilemma
Big question here where does it put Shopify merchants. In not very good position frankly. Those who use Mailchimp have to think about alternative integration or changing eDM vendor. Not impossible, but headache and extra expenses.
Still usually easier than changing eCommerce platform, so looks like obvious choice. Plus at the end of the day having all the data in one place sounds quite good, isn’t it?
If I was Shopify merchant, I would however think twice and probably start to prepare migration plan. Assuming that Mailchimp is one of a bigger partners with higher negotiation power who didn’t bow to eCommerce platform demands, sooner or later Shopify merchants will be in the situation of extreme lock-in level: if they decide to change eCommerce platform, they also need to change bunch of other digital technologies plus may lose significant part of their data.
Taking into account that Shopify is still not profitable business, burning investors cash, the next logical step after increasing switch cost for merchants will be raising the prices merchant pay.
With the barriers to migrate out that Shopify builds, more merchants will have no other choice than to swallow extra costs and stay on the platform at least short to mid term.
Single data warehous
What smart merchant should do
Having single repository or warehouse of all your business data is a great idea, however that repository should belong to merchants and be kept in transferable format, not with some proprietary SaaS platform like Shopify.
You (business) should own and control the oil data.
Of cause you may use SaaS or open-source tools to collect, transform, analyse and even store that data, but for business safety that data has to be in some standard form and can be comparatively easily transferred. For example if you store the data at AWS, which is a leader now, you should be able to move it to MS Azure or IBM Cloud or your own dedicated server if you decide to do so.
Yes it will require investments, but this is only the way to keep your business under your control, not at will of SaaS company shareholders and management.
With eCommerce platforms my biased opinion is use open-source if you can afford it.